Company Registration after FDI Approval in Nepal

How to incorporate a company after FDI approval?

Incorporating a company for FDI approval:

• Company Registration:
• Reserve a Name: Choose a unique and suitable name for your company and reserve it with the Office of the Company Registrar (OCR).
• Prepare Documents: Draft your company’s Memorandum and Articles of Association (MoA & AoA) outlining its purpose, structure, and governance. Ensure these documents align with the details specified in your approved FDI application.
• Submit for Registration: Submit the MoA & AoA, along with other necessary documents, to the OCR for official company registration.
• Tax Registration:
• Obtain PAN: Register your company with the Inland Revenue Department (IRD) to acquire a Permanent Account Number (PAN). This is essential for filing taxes and conducting financial transactions in Nepal.
• Business Registration:
• Local License: Register your business with the local Ward Office where you plan to operate. This will grant you a business license, allowing you to legally function within that specific location.
• Industry Registration (if applicable):
• Sectoral Requirements: Depending on your industry, additional registration with the Department of Industry (DoI) might be necessary.
• Non-Blacklisted Certificate:
• Financial Clearance: Obtain a certificate from the Credit Information Bureau (CIB) confirming your company and its directors are not blacklisted for any outstanding financial obligations.
• NRB Approval for Investment:
• Final Hurdle: Secure final approval from the Nepal Rastra Bank (NRB) to bring in the foreign investment amount you specified in your FDI application.

For more information on the FDI approval process, you can refer to our guide on Foreign Investment and One Window Policy.

What documents are required for company incorporation?

The documents required for company incorporation in Nepal can vary slightly depending on the company type (public vs. private) but here’s a general list:

• Application Form: Filled application form as per the government format (usually with a small fee).
• Memorandum of Association (MOA): This outlines your company’s objectives, authorized capital structure (share types and amounts).
• Articles of Association (AOA): This details internal governance rules, how meetings are conducted, and voting rights.
• Citizenship Certificates/Passports: Copies of citizenship certificates for Nepalese promoters or passports for foreigners.
• Shareholder Agreement (if any): An agreement outlining shareholder rights and responsibilities (optional but recommended for some structures).

What is the procedure for company registration?

Here’s a simplified overview of the company registration process in Nepal:

1. Reservation: Reserve your desired company name through the Office of Company Registrar (OCR) website or by visiting their office.
2. Document Preparation: Prepare necessary documents like: o Application form o Articles of Association (AoA) outlining company structure and objectives o Memorandum of Association (MoA) specifying company name, capital, and shareholders o Citizenship certificates of founders o Any mutual agreements between founders (if applicable)
3. Submission: Submit the completed documents and pay the required fee to the OCR.
4. Examination: The OCR examines the documents for accuracy and compliance.
5. Issuance of Registration Certificate: Upon successful review, the OCR issues your company registration certificate.
6. Tax Registration: Register with the Inland Revenue Department (IRD) to obtain your Permanent Account Number (PAN) for tax purposes.

For more details on company registration, you can refer to the Companies Act 2006.

How to obtain a business license after FDI approval?

After FDI approval in Nepal, obtaining a business license typically involves:

• Registering your company with the Department of Company Registrar (OCR).
• Submitting necessary documents (e.g., MOA, AOA) to the local Ward Office.
• Paying any applicable fees.
• Obtaining a Letter of Recommendation from the local government.
• Receiving your business license upon approval.

What are the requirements for a registered office?

The requirements for a registered office typically include a physical address within the jurisdiction where the company is registered. It must be capable of receiving and acknowledging official communications and notices from regulatory authorities and must be accessible to the public during normal business hours.

How to open a bank account for the new company?

• Choose a Bank:
• Research and select a reputable bank in Nepal that caters to businesses. Factors to consider include online banking capabilities, branch network accessibility, and services tailored to foreign-invested companies.
• Gather Documents:
• Prepare the following documents: o A copy of your company’s Certificate of Incorporation. o A copy of your company’s Memorandum and Articles of Association (MoA & AoA). o A copy of your company’s PAN (Permanent Account Number) obtained during tax registration. o Passport copies and citizenship certificates of directors and authorized signatories. o Board resolution authorizing the opening of a bank account. o Any other documents the bank may require (e.g., FDI approval letter).
• Visit the Bank:
• Schedule an appointment with a corporate banking representative at your chosen bank.
• Submit the required documents and complete any necessary account opening forms.
• Account Activation:
• Once your application is reviewed and approved, the bank will activate your company’s bank account. You’ll receive details like account number, online banking credentials (if available), and instructions for initial deposit.

For more information on banking regulations, you can refer to the Bank and Financial Institutions Act 2006.

What are the tax registration requirements?

Tax registration requirements in Nepal depend on whether you’re registering as an individual or a company. Here’s a breakdown for both:

Individual Registration:

• PAN Application Form: Fill out the application form for a Permanent Account Number (PAN). This is the primary tax identification number in Nepal.
• Citizenship Certificate: Submit a copy of your citizenship certificate (or passport for foreigners).
• Two Passport-Sized Photos: Provide two recent passport-sized photographs.
• Proof of Address (Optional): While not always mandatory, some offices might request a document proving your residential address (e.g., utility bill, rental agreement).

Company Registration:

• Company Registration Documents: Copies of your company registration certificate, Memorandum of Association (MOA), and Articles of Association (AOA).
• PAN Application Form: The company will need to apply for a PAN as well.
• Director/Shareholder Information: Details of directors and shareholders, including citizenship certificates (or passports for foreigners).
• Additional Documents (if applicable): Depending on your company type or industry, there might be additional documents required (e.g., foreign investment approval for foreign-owned companies).

For more information on tax regulations, you can refer to the Income Tax Act 2002.

How to register for VAT after FDI approval?

Eligibility:

• Not all companies need to register for VAT. The threshold for mandatory VAT registration is a total transaction value exceeding NPR 2,000,000 (approximately USD 16,000) within a fiscal year.

Post-FDI Approval:

• The Office of Company Registrar (OCR) likely communicates your company’s registration details to the Inland Revenue Department (IRD) during the company registration process.

VAT Registration Process:

1. Online Application: Visit the IRD website https://ird.gov.np/ and navigate to the “Taxpayer Portal” section. Select “Registration for PAN, VAT, Excise and submit an application for “Registration.”
2. Required Information: Fill out the online application form with details like: o Business registration number o Registration date o Registered address o Director or proprietor information o Estimated annual turnover o Other relevant information as requested on the form

What are the reporting obligations for the new company?

Reporting obligations for a new company in Nepal:

Financial Reporting:

• Audited Financial Statements: Most companies (with some exceptions) need to prepare and submit audited financial statements annually to the Inland Revenue Department (IRD) within a specified timeframe (usually 6 months after the fiscal year-end).
• Tax Returns: Companies must file tax returns with the IRD based on their income and applicable taxes (e.g., income tax, value added tax). Deadlines and filing methods can vary depending on the company type and tax category.

Company Filings:

• Annual General Meeting (AGM): Companies are required to hold an AGM within a specific timeframe (typically 4 months after the fiscal year-end) and submit minutes of the meeting to the Office of the Company Registrar (OCR).
• Changes in Company Information: Any significant changes in the company’s structure, directors, shareholders, or registered address must be reported to the OCR within a set timeframe.

Other Potential Reporting:

• Nepal Rastra Bank (NRB): Depending on the nature of your business or if there’s foreign investment involved, you might need to submit reports to NRB regarding foreign currency transactions or investment activities.
• Sector-Specific Regulations: Certain industries might have additional reporting requirements mandated by their specific regulatory bodies.

How to hire employees after incorporation?

After incorporating a company, hiring employees typically involves the following steps:

1. Obtain Employer Identification Number (EIN): In some countries, you need an EIN or equivalent to hire employees and withhold taxes.
2. Draft Employment Contracts: Prepare employment contracts outlining job roles, responsibilities, compensation, benefits, and terms of employment.
3. Register for Payroll Taxes: Register with tax authorities to withhold income tax, social security contributions, and other applicable payroll taxes from employees’ salaries.
4. Comply with Employment Laws: Ensure compliance with labor laws regarding working hours, minimum wages, leave entitlements, and workplace safety.
5. Recruitment and Selection: Advertise job openings, conduct interviews, and select suitable candidates based on qualifications and fit with company culture.
6. Onboarding: Orient new hires about company policies, procedures, and workplace expectations. Provide necessary training and resources for their roles.
7. Maintain Records: Keep accurate records of employee information, contracts, payroll records, and tax filings as required by law.

For more information on labor regulations, you can refer to the Labor Act 2017.

What are the labor law requirements for the new company?

Key labor law requirements for your new company in Nepal:

General Requirements:

• Labor Act Compliance: The Labour Act of 2017 (2074) is the primary legislation governing employer-employee relations in Nepal. Ensure your company adheres to its provisions.
• Employment Contract: Establish clear and written employment contracts with each employee. These contracts should outline job responsibilities, remuneration (wages and benefits), working hours, leave entitlements, termination clauses, and other relevant terms.

Key Employment Terms:

• Minimum Wage: Nepal has a government-mandated minimum wage, which can vary depending on the industry and location. Ensure your company meets or exceeds this minimum.
• Working Hours: The standard workweek in Nepal is 48 hours, with a maximum of 8 hours per day. Overtime work might be permitted with additional pay and employee consent.
• Leave Entitlements: Employees are entitled to paid leave for various reasons, including annual leave, sick leave, maternity leave, and public holidays. Ensure proper leave policies and record-keeping for these entitlements.
• Social Security: Nepal has a social security system. Depending on your company’s size and industry, you might be required to contribute to social security schemes for employee benefits.
• Termination: Termination procedures are outlined in the Labor Act. These include providing proper notice periods and severance pay under certain circumstances.

How to obtain necessary permits and licenses?

General guide to help you navigate the process:

1. Identify Required Permits and Licenses:

• Business Activity: The first step is to determine the specific permits and licenses required for your business activity. This can vary depending on your industry, location, and the nature of your operations.
• Government Websites: Several government websites can help you identify relevant permits and licenses. Here are a few resources: o Department of Industry (DoI): https://doind.gov.np/ o Office of the Company Registrar (OCR): https://nepaltradeportal.gov.np/ o Nepal Trade Information Portal: https://nepaltradeportal.gov.np/ o License Portal (Government of Nepal): https://applydlnew.dotm.gov.np/ (This portal provides comprehensive information on various license requirements and application processes)

2. Gather Required Documents:

• Application Forms: Each permit or license typically has a specific application form to be filled out. You can usually find these forms online through the relevant government websites mentioned above or obtain them from the issuing authority’s office.
• Company Documents: Depending on whether you’re applying as an individual or a company, you might need copies of your company registration certificate, PAN card, MOA, and AOA.
• Additional Documents: The specific documents required can vary depending on the permit or license type. These might include: o Lease agreement or proof of land ownership o Environmental Impact Assessment (EIA) report (for certain industries) o Fire safety certificate o Technical drawings or diagrams (for construction permits) o No Objection Certificates (NOCs) from other government agencies (in some cases)

3. Submit Application and Fees:

• Submission Method: The application process might involve submitting documents online (if available) or in person at the issuing authority’s office.
• Application Fees: There are usually application fees associated with permits and licenses. You can find information on the specific fees on the relevant government websites or by contacting the issuing authority directly.

4. Processing Time and Approval:

• Processing times can vary depending on the complexity of the permit or license and the specific government agency involved. It’s best to inquire about the estimated processing time when submitting your application.
• Approval: Once your application and documents are reviewed, you’ll receive notification of approval or rejection. Reasons for rejection might be provided, allowing you to revise and resubmit your application if necessary.

For more information on specific industry licenses, you can refer to our guide on Industrial Enterprises Act 1992.

What are the environmental compliance requirements?

Environmental Impact Assessment (EIA):

• Major projects with significant potential environmental impact require an EIA report.
• The Department of Industry (DoI) or Ministry of Environment, Forest and Soil Conservation (MoEF) determines if an EIA is mandatory based on project size and potential environmental impact. They have thresholds outlined in their regulations.

Environmental Permits:

• Businesses often need environmental permits for specific activities, such as: o Air or water pollution emissions o Waste management (hazardous or non-hazardous) o Utilizing natural resources (water abstraction, forestry)
• The permitting process typically involves submitting applications to the relevant government agency (DoI or MoEF) and adhering to specific environmental standards set by the government.

Compliance with Environmental Regulations:

• Nepal has various environmental regulations you must comply with to operate legally. These include: o Air and water quality standards o Waste management regulations o Forest conservation guidelines o Noise pollution control measures
• You can find these regulations on the websites of the MoEF (https://www.mofe.gov.np/) and the Department of Environment (http://doenv.gov.np/).

Resources for Understanding Requirements:

• Environmental Protection Act, 2076 (2019): This act forms the legal foundation for environmental protection in Nepal and outlines many compliance requirements.
• Government Websites: The MoEF and DoI websites offer information on environmental regulations, permitting procedures, and EIA guidelines.
• Environmental Consultants: Consulting a qualified environmental consultant can be highly beneficial. They can help you understand the specific requirements applicable to your business and ensure you’re following the necessary procedures.

How to ensure compliance with corporate governance?

Key strategies:

1. Strong Board Structure:

• Independent Directors: Appoint independent directors to the board who can provide objective oversight and challenge management decisions.
• Board Composition: Maintain a diverse board with a mix of skills and experience relevant to your company’s industry.
• Regular Meetings: Conduct regular board meetings with proper agendas, minutes, and documentation of decisions.

2. Clear Policies and Procedures:

• Code of Conduct: Establish a code of conduct outlining ethical behavior expectations for employees, directors, and management.
• Conflict of Interest Policy: Implement a policy to identify and manage potential conflicts of interest between the company and its stakeholders.
• Financial Reporting Procedures: Develop clear procedures for accurate and timely financial reporting, internal controls, and risk management.

3. Transparency and Disclosure:

• Annual Reports: Prepare and publish annual reports that transparently disclose financial performance, risks, and governance practices.
• Shareholder Communication: Maintain open communication with shareholders and provide them with timely information about the company’s affairs.
• Compliance with Listing Rules (if applicable): If your company is publicly listed, adhere to the listing rules of the Nepal Stock Exchange (NEPSE) regarding disclosure requirements.

4. Legal and Regulatory Compliance:

• Stay Updated: Monitor changes in corporate governance regulations and best practices.
• Legal & Accounting Advice: Seek legal and accounting advice to ensure compliance with all applicable laws and regulations related to corporate governance.
• Internal Audit: Consider conducting regular internal audits to assess your company’s compliance practices and identify any areas for improvement.

How to register intellectual property for the new company?

Registering intellectual property (IP) for a new company involves several steps:

1. Identify IP Assets: Determine which IP assets your company wants to protect, such as trademarks, patents, copyrights, or trade secrets.
2. Conduct IP Search: Conduct searches to ensure your IP is unique and does not infringe on existing rights.
3. File Applications: File applications for registration with the relevant IP office or authorities. Each type of IP has specific application requirements and forms.
4. Pay Fees: Pay the required fees for filing and processing the IP registration applications.
5. Examination: IP offices may examine applications to ensure they meet legal requirements and are eligible for protection.
6. Receive Registration: Once approved, receive certificates or registrations confirming your rights to the IP assets.
7. Maintain and Renew: Maintain IP rights by paying renewal fees and complying with any maintenance requirements as per the IP office regulations.
8. Enforce Rights: Monitor and enforce your IP rights against infringement or unauthorized use.

What are the procedures for obtaining work permits?

Procedure include, Obtaining work permits in Nepal for foreign workers involves applying to the Department of Labor with necessary documents like the employment contract, educational qualifications, and proof of sponsorship by your Nepal-based company.

For more information on work permits and visas, you can refer to our guide on Business Visa for FDI in Nepal.

How to handle foreign exchange transactions?

Foreign exchange transactions in Nepal typically involve authorized dealers (banks or financial institutions) licensed by Nepal Rastra Bank (NRB). One’ll need to comply with NRB regulations and provide necessary documentation for buying or selling foreign currency.

What are the requirements for financial reporting?

Nepal’s financial reporting requirements depend on your company size and type. Here’s a simplified overview:

• Nepal Financial Reporting Standards (NFRS): These are the main accounting standards for most companies. o NFRS Full: Applies to public companies and large entities with significant public interest. o NFRS for SMEs (Small and Medium Enterprises): Applies to qualifying smaller businesses with less complex operations. o NFRS for Micro-Entities: Applies to very small businesses with limited financial activity.
• Financial Statements: You’ll need to prepare and submit financial statements like balance sheets, income statements, and cash flow statements following the applicable NFRS standards.
• Audit Requirements: Companies adhering to NFRS Full likely require audits by a registered auditor. Smaller companies under NFRS for SMEs might require audits based on specific criteria.
• Deadlines: Filing deadlines for financial statements vary but typically fall within a few months after the fiscal year-end.

How to set up accounting systems for the new company?

Setting up an accounting system involves choosing accounting software, defining a chart of accounts, and establishing record-keeping procedures for your new company in Nepal.

What are the ongoing compliance requirements for the new company?

The ongoing compliance requirements for a new company typically include:

1. Annual Filings: Submitting annual financial statements, tax returns, and other mandatory reports to regulatory authorities.
2. Tax Compliance: Ensuring timely payment of taxes, including income tax, sales tax, and payroll taxes, and filing tax returns as required.
3. Corporate Governance: Holding regular board meetings, maintaining minutes, and complying with corporate governance guidelines.
4. Regulatory Filings: Filing regulatory reports, disclosures, and updates with relevant government agencies or industry regulators.
5. Employment Compliance: Adhering to labor laws regarding employee rights, wages, working hours, and workplace safety.
6. Intellectual Property Renewals: Renewing trademarks, patents, and other intellectual property registrations to maintain legal protection.
7. Compliance with Industry Standards: Meeting industry-specific regulations, certifications, and standards applicable to the company’s operations.
8. Data Protection and Privacy: Complying with data protection laws and ensuring the security and privacy of customer and employee data.
9. Environmental Compliance: Following environmental regulations and obtaining necessary permits or approvals for operations affecting the environment.

For more information on ongoing compliance requirements, you can refer to our guide on Corporate Resolution for FDI in Nepal.

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